It's better here still resonates
The economic forecast for the Greater Peoria Area offered last week at Weaver Ridge by business leaders was stormy. But, they said, there is a rainbow at the end of the storm, and it is coming into focus.
“Life is not about waiting for the storm to pass. Life is about learning to dance in the rain,” said Keith Steffen, CEO of OSF Saint Francis Medical Center, one of the speakers at the forum sponsored by the Heartland Partnership.
All of the speakers — Steffen; Vickie Clark, COO of the Economic Development Council of Central Illinois; Mark Joseph, executive vice-president of South Side Bank; Matt Coulter, vice president and sales and recycling manager for PDC; and Jim McConoughey, CEO of the Heartland Partnership — said better times are headed to the region this year and next.
Joseph said area community banks are strong and able to lend to existing small businesses and new start-ups that are properly capitalized and possess a strong business plan. But, requests for capital are down.
“New start-up requests are down,” Joseph said.
“Current businesses are tightening their belts. They have little appetite for more debt.”
Customers, he said, are finding it increasingly difficult in these times to service their debt with decreasing revenues.
“Companies reliant on state funds have especially struggled and have often found themselves in need of interim working capital funds until they have been able to collect their receivables,” he said.
“It is vital to the success of a business banking relationship that the business owner has open communications with their banker at the earliest recognition of potential problems.”
Joseph said the Small Business Administration may be riding to the rescue of some small business owners with proposed legislation that would extend a current program offering a 90 percent SBA guarantee extending less risk to banks lending to certain small businesses that might not otherwise obtain financing.
“Also pending is legislation that would expand the 504 Program in order to allow for refinancing of owner-occupied commercial real estate loans up to 90 percent of current value,” Joseph said.
“We know 2010 holds its share of challenges for both small business and the banking industry. The potential of higher taxes due to our country’s escalating debt is a definite concern. The threat of rising interest rates could also have a major impact, but the lessons learned in getting through the recent recessionary times should pay large dividends in the days ahead.”
Steffen said little is absolute in the health care sector.
“As the health care debate rages in Washington and throughout our country, few things are certain. But we know that the present system is unsustainable, change is inevitable, and the legislative outcome is totally unpredictable,” he said.
“However, health care is a major and strong portion of the local economy.”
Steffen said the value of a company’s mission should be even more important in times of economic downturn.
“The Sisters have always taken a conservative and long-view approach, but have never shied away from risk. Our most ambitious investments have taken place during economic downturns, in preparation for advancements in patient care and in establishing strategies aligned with a well developed business case for the future of health care,” he said.
“That has been fundamental to our ‘value proposition’ of creating market differentiation among competitors, both locally and regionally. Our regional referrals represent 34 percent of the total number of patients served. Those patients and their families benefit the Peoria community as well as Saint Francis Medical Center.”
OSF Saint Francis Medical Center, he said, has set itself apart in health care locally and regionally with unique services — like seven dedicated intensive care units, a neo-natal center, four helicopters and organ transplants.
“The most important thing, our strength, is our OSF mission and vision. In a changing and challenging environment, the basics shouldn’t change,” Steffen said. “Growth will come again.”
A new economy
McConoughey looked out the windows of the Weaver Ridge Clubhouse.
“It’s sunny,” he said. “It’s a metaphor for the local economy.”
In 2000, he said the economy shifted from an industrial and manufacturing base to one focused on the service sector. Today, he said, in the midst of an economic crisis the economy is on the verge of evolving yet again.
“The key indicators we watch to guage our region are employment. This equates to productivity and it is trending flat to slow. We will watch for an incline in 2011,” he said.
Real estate, he said, is another indicator to watch.
“This is an indication of community value. It is trending up slightly,” he said.
Retail, he said, has to be watched.
“This is a look at our regional cash flow and it is remaining flat.
The latest unemployment numbers for the Peoria Metro are 11.1 percent. The 2009 average was 10.5 percent. Since August, rates have remained relatively stable. Flat is the new up! The majority of job loss has been in the manufacturing sector. As prosperity returns, the rate of unemployment will return to around 5 percent,” McConoughey said.
“The housing market has remained relatively stable, despite the struggling economy. In 2010, all but June and July sales are forecast to be in the positive, and as consumer confidence returns, a more robust rebound will occur. In the interim, the majority of housing transactions will result from job relocation and retirement. We expect retail sales will get a bit of a boost this year. After two down years we are seeing forecasts that are similar to 2007 with $4.1 billion in sales for the Peoria metro area.”
McConoughey said as a result of the recession consumers are becoming more careful with their money. That, he said, requires a response from business.
“Many businesses have already learned the importance of diversifying their businesses and expanding their customer base. And since consumers are going to demand it, business will have to become more transparent in their operations,” McConoughey said.
“The Central Illinois region is known for working together, and if we are going to continue to rise out of this recession, collaboration will be a necessity. Through cooperation, we can showcase what the region has to offer and emerge from the recession better than expected.”